Five Steps to Payroll Transparency

If you have decided that payroll transparency is right for your company, you may be excited to get the ball rolling and post the numbers for all to see. Going about payroll transparency in the wrong way can make for disgruntled employees and potentially even lawsuits, however. Taking the time to implement payroll transparency by moving through the following steps can mitigate issues and help generate excitement about the new policy.

  1. Speak to Employees About Transparency

Employees should be let into the fold regarding pay transparency long before any information is revealed. Finding out how employees feel about pay transparency, what their concerns are, and whether it’s a change they can get behind will help you figure out how to optimally manage the change. Employees may feel more included and valued, as well.

  1. Make Sure Pay Is Fair and Competitive

Before going public with your salaries, it’s extremely important to make sure that your salaries are competitive and fair. Employees have access to sites like Glass Door, so they can do their own research to see if you are paying competitively for the position and the field. Once you release the payroll information, employees will be able to see if you are paying fairly based on tenure and merits.

If there are gaps between what employees in the same position are making, it’s wise to provide additional information that can help to explain the gaps. Making it possible for employees to take charge over their own development and work towards raises and promotions can help to make that information actionable.

  1. Decide Exactly What Information Will Be Public

Some companies decide it’s best to keep the actual salaries hidden, but disclose the methodology behind salary decisions and pay increases. Other companies feel it’s best to release the salary information for employees at certain levels or in certain positions, rather than the whole kit and caboodle. Figure out what you want to reveal before you get started to make the process smoother.

  1. Make Pay Data Easy to Access

After you’ve taken the steps to determine which information will be viewable by employees (and perhaps the public), make sure that accessing that information is easy. Employees will be curious about the new information, so they will likely be logging onto HR software and following the steps that you have outlined to access it. Make sure that this activity won’t crash the system and that employees won’t encounter glitches.

Making sure that employees can easily access the new information can help to garner support for the new transparency policy. If employees feel frustrated after trying to view the information, they may deem the policy shift a failure. Pay data should also be easily accessible to candidates applying through recruitment software.

  1. Provide Support and Guidance for Employees

Employees may have questions or concerns after pay information has been released. Making sure there are support and guidance systems in place to quickly address these concerns and questions can make the transition easier for employees. If too many employees seem confused or concerned about the new payroll policy, it may be helpful to plan for training seminars or company meetings.

Payroll transparency can change a company culture for the better and promote other positive changes if the transition is handled properly. Taking the time to make employees comfortable with the new policy and to make sure the technology supports it can make all the difference in successful payroll transparency.

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The Emperor’s New Payroll Policy: Is Transparency Right for Your Company?

In the Hans Christian Andersen tale “The Emperor’s New Clothes,” weavers tell the emperor that they have crafted fabulous new garments, but that they are invisible to anyone who is stupid, incompetent, or unfit for their positions.

When the emperor cannot see the clothing, he keeps it to himself for fear of being perceived as stupid or unfit. Likewise, most of his kingdom conceals their notice of his lack of raiment for fear of being called out as incompetent – until one gutsy young boy speaks up.

In the working world, there are many things that can fall into the category of the emperor’s clothing, but pay is probably the single biggest issue that everyone thinks about and no one talks about. Keeping pay information secret has been a norm, but some companies have decided to emulate the young boy and uncover the issue.

Pay Transparency brings many pay woes into the light, however, which may have both benefits and drawbacks. Consider the following when assessing whether to adopt a new payroll policy and bare it all to your employees.

May Affect Employee Contentment

When employees are used to not knowing what everyone else gets paid, viewing the information can be a shock. Employees may feel more content if they are making the same or more than coworkers, but less content if they are making less. You may see shifts in satisfaction levels if you have recently decided to go transparent, which can be beneficial or harmful.

Addresses Fairness Issues

When employees don’t know what one another get paid, there are often unspoken questions of fairness. Going transparent addresses these issues, but may not always be what employees want to hear. Providing information about why pay differs between employees in the same or similar positions may help to tackle fairness woes that can arise.

Can Assist with Candidate Fit

Being transparent right from the start by including pay information in position postings through applicant tracking software can assist with finding better matched candidates. Letting candidates know what they can expect to make helps candidates better assess whether your company is right for them. You may also see your quality of hires improve, since talented candidates generally don’t want to gamble with their salary.

Shows Employees Development Potential

Sharing pay information in charts that detail potential merit increases and promotion opportunities through HRIS software can motivate and engage employees – or deter employees if it seems that too much is required. In either case, being open and honest about what it will take for an employee to see a raise or promotion will help you to weed out under performers while inspiring high performers. You may also use it as a built-in, employee-driven succession planning tool.

Could Impact Turnover

After sharing salaries, you may see your turnover increase or decrease. Some employees will likely feel that they aren’t making enough when they see other employee salaries, and they may feel that their privacy has been breached due to the sharing of their salary. Other employees are likely to be happy about the new transparency policy, however, and you will likely see turnover rates decrease in the long run.

Deciding upon payroll transparency is a big decision that can impact your company in many ways. For best results, consider these factors and talk to your employees about their concerns before making salaries public.

Photo Credit: TrainingOnLimited Flickr via Compfight cc